GOP’s Phantom Job Losses

Posted on
November 22, 2011

Ooops!

Republicans — eager to show that President Obama’s oil and gas drilling policies “cost jobs” — have been using a number they now admit was more than three times too high. Even after they corrected their error (after we pointed it out), they started using a figure that is based on industry-sponsored studies, uses dubious assumptions and doesn’t apply to any jobs that currently exist.

It’s just the latest example of how both sides tend to use grossly exaggerated claims about jobs when debating their pet policies. Back in 2009, the Obama administration claimed that cap-and-trade legislation would create jobs, when its own energy experts estimated hundreds of thousands would be lost.

This time it’s the Senate Republican Policy Committee’s staff doing the exaggerating. In a “policy paper” posted on its website, the RPC claimed Obama’s policies could cost 934,000 “potential” jobs in the oil and gas industry. After we pointed out some bloopers committed by the staff, the RPC admitted making mistakes and revised the estimate down to 256,000.

But even that is too high. It is actually a prediction that oil-industry employment will remain unchanged, and that 256,000 “potential” new jobs will fail to materialize. It’s important to understand that the report is attempting to predict effects on future job growth, not possible decreases from present levels of employment. The bloated 934,000-job figure represented current and future jobs. And we found that the GOP’s dire warning could only materialize if Obama’s policies wiped out the entire oil and gas industry.

The RPC’s projections of offshore and onshore job losses were part of a larger set of claims about the effect on employment of what Republicans called the president’s “flawed energy policies.” (Actually, the regulations cited are not so much “energy” policies as they are anti-pollution policies. And they include one that President Obama directed the Environmental Protection Agency to withdraw — a proposal that would have tightened regulations on smog-forming ozone.) The list of claims was originally posted on the committee’s website Aug. 2. All but one relied on various industry-sponsored studies.

We will focus here on the onshore and offshore oil and gas jobs, where the biggest mistakes were made.

Western States Drilling Jobs

The RPC originally claimed that onshore oil and gas delays will cost 504,000 jobs, citing a study commissioned by the Western Energy Alliance — a trade association representing oil and natural gas interests in the West (North Dakota, Montana, Utah, Wyoming, Colorado and New Mexico.) But that’s the total number of jobs predicted to exist by 2020, including all existing jobs.

The Blueprint for Western Energy Prosperity, July 8: The number of direct, indirect and induced jobs in the oil and natural gas sector is projected to increase by 16% to 504,120 by 2020.

So, in effect, the RPC was claiming that all current and future onshore oil and gas jobs would be destroyed or “at risk” as a result of Obama’s policies: 434,373 current jobs, as well as the 69,747 future jobs predicted in the report.

Jon Haubert, a spokesman for the Western Energy Alliance, agreed that the group’s report did not provide support for the RPC’s claim.

Haubert, Nov. 2: Saying the whole onshore western oil and gas industry would be wiped out would be a misrepresentation of our study.

The RPC revised the numbers after we brought this to its attention, reducing the potential job loss from 504,00 to 69,000. Even that is a huge stretch.

In reality, the industry report did not object to any regulations currently being proposed by the Obama administration. Rather, it called for a moratorium on “new and expanded” regulation. So the RPC’s 69,000 assumes all future onshore drilling jobs will somehow be wiped out by some policy that the administration hasn’t yet proposed.

New regulations are certainly possible — the EPA is studying potential effects on drinking water from the practice of hydraulic fracturing, which is one of the factors behind the current drilling boom. “Fracking” has allowed drillers to tap oil and gas previously trapped in shale formations. But for the moment, at least, EPA is only studying it, not regulating it.

The Offshore Mistake

There was a similar, but more egregious error in the RPC’s report on offshore drilling jobs.

After the Deepwater Horizon oil spill in the Gulf of Mexico last year, the Obama administration imposed a six-month moratorium on new permits for deep-water drilling. That has since been lifted, but the GOP is unhappy with new regulations placed on the industry, referring to this as a “permitorium.”

The RPC claimed that 430,000 offshore jobs would be lost, relying on a report prepared by Quest Offshore for the American Petroleum Institute and the National Ocean Industries Association. That report didn’t try to estimate how many jobs might be lost under Obama’s policies. Rather, it projected a total of 430,000 offshore jobs by 2013 — an increase of 77 percent, or 187,000 new jobs.

So once again the RPC misrepresented a report by figuring that all current and future offshore jobs would be eliminated or “at risk” — 242,317 current jobs plus 186,891 future jobs. The RPC recognized its error after we inquired about it and revised the job loss estimate from 430,000 to just the potential job growth of 187,000. Brendon Plack, a staffer at the RPC, told us in an email: “To be as accurate as possible, we corrected the website this week as soon as we realized the error.”

But that’s still an inflated figure. The report says the 187,000-job gain will take place if the government resumes issuing permits at the same rate as it did before the moratorium. Quest Offshore’s manager of consulting, Sean Shafer, told us via email that the study “didn’t calculate” jobs that would be at risk and he couldn’t comment on that. He did say that permits are being issued “at slower than historical rates,” and that “it would be fair to say that a large percentage of the job growth would be at risk through 2013.” But he also said that “not all the job growth would likely be affected by regulation,” adding that some existing jobs may be lost because of “regulation as well as just natural turnover.”

Alaskan Jobs

The RPC also claimed that “Alaska drilling delays” could affect as many as 57,000 jobs. The GOP estimate refers to oil exploration and development in the Chukchi and Beaufort Seas off Alaska’s Arctic coast and is based on a report produced by Northern Economics and the University of Alaska Anchorage’s Institute of Social and Economic Research. But here the claim is not that administration policy will “cost” jobs, but rather “delay” their creation.

Also, the RPC put the figure at 57,000 jobs, even though the report actually put the total at 54,700. After we pointed out this discrepancy, the RPC corrected the error on its website.

A final point: The headline on the Republican report is “Obama Energy Policies Cost Jobs,” giving the impression that the numbers are estimates of actual jobs lost. Elsewhere the report refers in smaller print to jobs being “at risk,” indicating that these might be lost or might not. Either way, the numbers are padded. They are actually industry-sponsored estimates of future job gains, at least some of which are likely to appear with or without the environmental regulations of which the GOP complains.

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